<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 4
Portfolio of Investments......................... 5
Statement of Assets and Liabilities.............. 10
Statement of Operations.......................... 11
Statement of Changes in Net Assets............... 12
Financial Highlights............................. 13
Notes to Financial Statements.................... 14
</TABLE>
VIM SAR 6/96
<PAGE> 2
LETTER TO SHAREHOLDERS
May 15, 1996
Dear Shareholder,
While interest rates drifted
downward during the fourth quarter of
last year, such was not the case in the
first quarter of 1996. Early in the
quarter, municipal bond prices [PHOTO]
demonstrated increased volatility in
conjunction with February's economic
announcements, which revealed a revival
in economic growth, impressive
employment levels, and moderate DENNIS J. MCDONNELL AND DON G. POWELL
inflation. This positive economic
environment, however, did not translate
into positive movement for the bond markets. Instead, the markets became wary,
because inflation often accompanies economic growth.
Other factors influencing the municipal bond market early in the year
included:
- Intense weather conditions, which hindered distribution and manufacturing,
were experienced by much of the United States and affected certain
municipal bond sectors.
- The expectation that a federal budget agreement was forthcoming helped
bolster municipal bonds, especially at the longer end of the spectrum.
- The proposal of tax reform--and the threat of municipal bonds having
diminished tax-exempt status--continued to dampen demand for municipals,
resulting in lower bond prices.
We believe the beginning of 1996 reflected the market's reaction to the
possibility of a return to long-term economic growth. This, coupled with
continued low inflationary conditions, has served to put the Federal Reserve
Board in a neutral policy mode, bringing relative calm to the market--although
currently at higher interest rate levels.
PERFORMANCE SUMMARY
The Van Kampen American Capital Trust for Insured Municipals' (ticker symbol
VIM) common stock price was up 2 percent for the six-month period, closing at
$16.125, while the municipal bond market was down 4 percent for the same period,
according to the Bond Buyer's 40 Municipal Bond Index.
For the six months ended April 30, 1996, the Trust achieved a total return
of 5.73 percent(1), based on market price. Longer-term, the Trust achieved a
one-year total return of 13.81 percent(1), based on market price for the period
ended April 30, 1996, including reinvestment of dividends.
Continued on page two
1
<PAGE> 3
Many closed-end municipal bond funds are currently offering higher after-tax
yields than taxable income alternatives, and your Trust is no exception. Based
on the closing common stock price on April 30, 1996, the Trust for Insured
Municipals had a tax-exempt distribution rate of 6.51 percent (3). In other
words, investors in the 36 percent federal income tax bracket would have to earn
a yield of 10.17 percent(4) on a taxable investment to equal your Trust's
tax-exempt distribution rate.
MARKET OUTLOOK
The economy rebounded in the first quarter of 1996, despite poor
weather in the East and the remnants of a slow fourth quarter of 1995, which
was hindered by weak construction activity, two government shutdowns, and a
strike at Boeing. We believe the momentum of the first quarter can carry into
the second, due in part to renewed auto production in the aftermath of the
General Motors strike and an end to the budget stalemate between the White
House and Congress. We expect a modest slowdown in the summer months, as higher
interest rates could slow activity in interest-sensitive sectors of the
economy, such as housing.
The Fed's protracted period of easing, and relatively neutral stance,
favors the growth we are currently experiencing. Given the strong employment
situation and commodity price increases, we think the Fed will await further
economic evidence before adjusting interest rates again--probably summertime at
the earliest. So far, guides such as the Consumer Price Index continue to
indicate modest levels of inflation. More importantly, we continue to see few
signs of emerging inflation in either unit labor costs, hourly earnings or the
employment cost index.
[PORTFOLIO HOLDINGS GRAPH]
Portfolio Holdings by Industry
as of April 30, 1996
<TABLE>
<S> <C>
Multi-Family Housing............ 6.3%
General Purpose................. 6.4%
Waste Disposal.................. 6.9%
Transportation.................. 8.0%
Retail Electric/Gas/Telephone... 9.4%
Wholesale Electric.............. 6.2%
Health Care..................... 18.2%
Airport......................... 14.6%
Other........................... 13.0%
Single-Family Housing........... 11.0%
</TABLE>
- --------------------------------------------------------------------------------
INVESTMENT TERM: REVENUE BONDS
Revenue bonds are one of the three most common types of municipal bonds--the
other two are general obligation bonds and municipal notes. Revenue bonds
are issued to finance income-generating projects such as turnpikes, toll
bridges and airports. The revenues these projects bring in are used to pay
interest and principal to bondholders.
- --------------------------------------------------------------------------------
Continued on page three
2
<PAGE> 4
Finally, as the November elections approach, the debate on tax reform may
grow. We believe the outcome in the long run will be positive, or at worst
neutral, for municipal bonds. That's good news for the market, which was
concerned that flat tax proposals could threaten the tax-exempt status of
municipal bonds. While the debate may not be over and legislation may be
forthcoming, the market should be more confident.
PORTFOLIO COMPOSITION BY CREDIT QUALITY AS OF APRIL 30, 1996
AAA.............................. 100.0%
BASED UPON CREDIT QUALITY RATINGS ISSUED BY STANDARD & POOR'S.
FOR SECURITIES NOT RATED BY STANDARD & POOR'S, THE MOODY'S RATING IS USED.
Indeed, we expect investor demand for municipal securities to exceed supply,
which should add price stability to the general market. And with municipal bond
yields currently at attractive levels relative to Treasuries, investor demand
for tax-exempt securities should increase.
In summary, our view of the general municipal market is positive. From the
decreasing likelihood of tax reform in the near term to specific market
conditions, we believe the market is on solid ground. With our dedication to
comprehensive research and long-term investment perspective, we believe your
Trust is in a position to benefit in the coming months.
Sincerely,
[SIG]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
3
<PAGE> 5
PERFORMANCE RESULTS FOR THE PERIOD ENDED APRIL 30, 1996
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
(NYSE TICKER SYMBOL--VIM)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six-month total return based on market price(1)........... 5.73%
Six-month total return based on NAV(2).................... (.48%)
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................ 6.51%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)................................... 10.17%
SHARE VALUATIONS
Net asset value........................................... $ 16.10
Closing common stock price................................ $16.125
Six-month high common stock price (03/07/96).............. $16.500
Six-month low common stock price (12/19/95)............... $15.625
Preferred share (Series A) rate(5)........................ 3.500%
Preferred share (Series B) rate(5)........................ 3.760%
</TABLE>
(1) Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions for
the period in accordance with the Trust's dividend reinvestment plan, and sale
of all shares at the closing common stock price at the end of the period
indicated.
(2) Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3) Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4) The taxable-equivalent distribution rate is calculated assuming a 36%
federal income tax bracket.
(5) See "Notes to Financial Statements" footnote #6, for more information
concerning Preferred Share reset periods.
A portion of the interest income may be taxable for those investors subject to
the federal alternative minimum tax (AMT).
Past performance does not guarantee future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust shares,
when sold, may be worth more or less than their original cost.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
ALABAMA 0.4%
$ 1,000 Birmingham-Carraway, AL Methodist Hlth Sys Ser A
(Connie Lee Insd)................................ 5.875% 08/15/25 $ 971,340
-----------
ALASKA 1.7%
950 Alaska St Hsg Fin Corp Coll Mtg Oblig Ser A
Subser A2 (GNMA Collateralized).................. 7.050 06/01/25 981,787
1,000 Alaska Student Ln Corp Student Ln Rev Ser A
(AMBAC Insd)..................................... 6.000 07/01/07 1,005,670
2,000 North Slope Borough, AK Ser B (FSA Insd)......... 7.500 06/30/01 2,244,320
-----------
4,231,777
-----------
ARIZONA 2.7%
1,500 Arizona Hlth Fac Auth Hosp Sys Rev Phoenix
Baptist Hosp & Med Rfdg (MBIA Insd).............. 6.250 09/01/11 1,555,575
1,573 Peoria, AZ Indl Dev Auth Multi Family Rev Sr Hsg
Casa Del Rio A Rfdg (GNMA Collateralized)........ 7.300 02/20/15 1,690,975
3,000 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease Oblig
Irvington Proj Tucson Ser A Rfdg (FSA Insd)...... 7.250 07/15/10 3,289,590
-----------
6,536,140
-----------
CALIFORNIA 12.1%
2,500 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Pacific Gas & Elec Ser B (FSA Insd).............. 6.350 06/01/09 2,602,950
1,000 California St Pub Wks Brd Lease Rev Ser A (AMBAC
Insd)............................................ 5.750 09/01/21 964,410
9,000 Los Angeles Cnty, CA Pension Oblig Ctfs Ltd Muni
Oblig Ser A (MBIA Insd) (d)...................... 0/6.900 06/30/08 9,925,200
7,500 Mount Diablo, CA Hosp Dist Rev Ser A (Embedded
Cap) (AMBAC Insd)................................ 5.125 12/01/23 6,494,400
1,305 Paramount, CA Redev Agy Tax Alloc (MBIA Insd).... 6.250 08/01/10 1,375,940
1,000 San Francisco, CA City & Cnty Redev Agy Hotel Tax
Rev (FSA Insd)................................... 6.750 07/01/15 1,087,550
9,000 San Jose, CA Single Family Mtg Rev Ser A Cap
Apprec (GEMIC Mtge Collateralized)............... * 04/01/16 2,729,610
4,240 University of CA Rev Multi Purp Proj Ser D (MBIA
Insd)............................................ 6.300 09/01/14 4,388,061
-----------
29,568,121
-----------
COLORADO 1.4%
2,125 Boulder Cnty, CO Multi Family Hsg Rev Legacy
Apartments Proj (GNMA Collateralized)............ 6.000 11/20/15 2,072,427
1,500 Denver, CO City & Cnty Arpt Rev Ser B (MBIA
Insd)............................................ 5.750 11/15/15 1,444,620
-----------
3,517,047
-----------
FLORIDA 3.7%
1,000 Brevard Cnty, FL Sch Brd Ctfs Ser B (AMBAC
Insd)............................................ 5.500 07/01/21 940,950
3,000 Dade Cnty, FL Aviation Rev (MBIA Insd)........... 6.600 10/01/22 3,126,480
1,000 Jacksonville, FL Wtr & Swr Rev United Wtr FL Proj
(AMBAC Insd)..................................... 6.350 08/01/25 1,016,360
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$ 1,780 Lee Cnty, FL Solid Waste Sys Rev (MBIA Insd)..... 5.375% 10/01/15 $ 1,669,800
1,000 Melbourne, FL Arpt Rev Rfdg (MBIA Insd) (b)...... 6.250 10/01/18 1,010,230
1,335 Orange Cnty, FL Hsg Fin Auth Single Family Mtg
Rev Ser A (GNMA Collateralized).................. 6.200 10/01/16 1,341,622
-----------
9,105,442
-----------
HAWAII 1.6%
3,500 Hawaii St Dept Budget & Fin Spl Purp Mtg Rev
Hawaiian Elec Co Proj Ser B (MBIA Insd).......... 7.600 07/01/20 3,829,420
-----------
ILLINOIS 8.7%
9,050 Chicago, IL O'Hare Intl Arpt Spl Fac Rev Intl
Terminal
(MBIA Insd)...................................... 6.750 01/01/18 9,430,371
4,150 Chicago, IL Residential Mtg Rev Ser B Rfdg (MBIA
Insd)............................................ * 10/01/09 1,635,225
3,000 Onterie Cent Hsg Fin Corp IL Mtg Rev Onterie Cent
Proj Ser A Rfdg (MBIA Insd)...................... 7.000 07/01/12 3,173,400
6,150 Onterie Cent Hsg Fin Corp IL Mtg Rev Onterie Cent
Proj Ser A Rfdg (MBIA Insd)...................... 7.050 07/01/27 6,469,185
1,125 Peoria, IL Pub Bldg Comm Sch Bldg & Sch Fac Rev
Sch Dist 150 Proj B (AMBAC Insd)................. * 12/01/08 508,309
-----------
21,216,490
-----------
KANSAS 2.6%
3,500 Burlington, KS Pollutn Ctl Rev KS Gas & Elec Co
Proj Rfdg (MBIA Insd)............................ 7.000 06/01/31 3,834,565
2,220 Olathe Labette Cnty, KS Single Family Mtg Rev
Coll Ser A-I Rfdg (GNMA Collateralized).......... 8.100 08/01/23 2,449,859
-----------
6,284,424
-----------
KENTUCKY 0.8%
2,000 Kenton Cnty, KY Arpt Brd Arpt Rev Northern KY
Intl Arpt (MBIA Insd)............................ 5.750 03/01/13 1,939,040
-----------
LOUISIANA 5.4%
3,145 Calcasieu Parish, LA Mem Hosp Svc Dist Hosp Rev
Lake Charles Mem Hosp Proj Ser A (Connie Lee
Insd)............................................ 6.650 12/01/21 3,291,148
3,395 Louisiana Pub Fac Auth Rev (Embedded Cap) (FGIC
Insd)............................................ 5.875 02/15/11 3,369,809
65 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln A (FSA Insd)...................... 6.600 01/01/04 69,002
1,005 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln A (FSA Insd)...................... 6.700 01/01/05 1,067,280
670 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln A (FSA Insd)...................... 6.800 01/01/06 711,533
1,420 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln A (FSA Insd)...................... 6.850 01/01/09 1,485,888
2,900 New Orleans, LA Pub Impt (FGIC Insd)............. 7.000 09/01/19 3,250,639
-----------
13,245,299
-----------
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MARYLAND 0.7%
$ 1,675 Prince Georges Cnty, MD Hsg Auth Mtg Rev
Riverview Terrace Ser A Rfdg (GNMA
Collateralized).................................. 6.400% 12/20/10 $ 1,744,362
-----------
MASSACHUSETTS 2.7%
4,630 Massachusetts Edl Ln Auth Edl Ln Rev Muni
Forwards Issue E Ser A (AMBAC Insd).............. 7.000 01/01/10 4,642,131
2,000 Massachusetts St Hlth & Edl Fac Auth Rev Metro
West Hlth Inc Ser C Rfdg (AMBAC Insd)............ 6.300 11/15/12 2,083,620
-----------
6,725,751
-----------
MICHIGAN 4.6%
6,000 Detroit, MI Econ Dev Corp Res Recovery Rev Ser A
(FSA Insd)....................................... 6.875 05/01/09 6,395,100
1,000 Monroe Cnty, MI Econ Dev Corp Ltd Oblig Rev Coll
Detroit Edison Co Ser AA Rfdg (FGIC Insd)........ 6.950 09/01/22 1,146,000
3,500 Monroe Cnty, MI Pollutn Ctl Rev Coll Detroit
Edison Monroe Ser 1 (MBIA Insd).................. 6.875 09/01/22 3,694,670
-----------
11,235,770
-----------
MISSISSIPPI 4.6%
2,785 Mississippi Home Corp Single Family Rev Mtg
Access Pgm (GNMA Collateralized)................. 7.100 05/01/23 2,937,869
1,875 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser C (GNMA Collateralized)........... 8.125 12/01/24 2,074,762
1,830 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser D (GNMA Collateralized)........... 8.100 12/01/24 2,026,268
1,500 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser E (GNMA Collateralized)........... 8.100 12/01/25 1,655,250
2,500 Mississippi Hosp Equip & Fac Auth Rev Rush Med
Fndtn Proj (Connie Lee Insd)..................... 6.700 01/01/18 2,622,475
-----------
11,316,624
-----------
NEBRASKA 1.7%
2,300 Nebraska Invt Fin Auth Single Family Mtg Rev
(Inverse Fltg) (GNMA Collateralized)............. 9.475 09/15/24 2,366,125
2,000 Nebraska Pub Pwr Dist Rev Pwr Supply Sys Ser A
(MBIA Insd)...................................... 5.250 01/01/28 1,821,060
-----------
4,187,185
-----------
NEVADA 3.8%
9,000 Clark Cnty, NV Indl Dev Rev NV Pwr Co Proj Ser A
(FGIC Insd)...................................... 6.700 06/01/22 9,325,530
-----------
NEW JERSEY 8.1%
8,500 Mercer Cnty, NJ Impt Auth Rev Solid Waste Ser A
Rfdg (FGIC Insd)................................. 6.700 04/01/13 8,605,400
8,250 New Jersey Hlthcare Fac Fin Auth Rev Overlook
Hosp Assn Ser E (FGIC Insd)...................... 6.700 07/01/13 8,601,285
2,865 Port Auth NY & NJ Cons 102nd Ser (MBIA Insd)..... 5.625 10/15/17 2,751,202
-----------
19,957,887
-----------
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW MEXICO 1.7%
$ 1,900 Albuquerque, NM Arpt Rev Ser A (AMBAC Insd)...... 6.600% 07/01/16 $ 1,975,905
2,070 New Mexico Edl Assistance Fndtn Student Ln Rev
Ser A (AMBAC Insd)............................... 6.850 04/01/05 2,199,313
-----------
4,175,218
-----------
PENNSYLVANIA 6.3%
7,500 Allegheny Cnty, PA Arpt Rev Gtr Pittsburgh Intl
Arpt Ser A (FSA Insd)............................ 6.800 01/01/10 7,989,225
4,000 Allegheny Cnty, PA Arpt Rev Gtr Pittsburgh Intl
Arpt Ser B (FSA Insd)............................ 6.625 01/01/22 4,115,600
1,330 Allegheny Cnty, PA Residential Fin Auth Mtg Rev
Single Family (GNMA Collateralized).............. 7.100 05/01/24 1,380,620
1,950 Sayre, PA Hlthcare Fac Auth Rev Hosp VHA PA/VHA
East Fin Pgm B (AMBAC Insd)...................... 6.375 07/01/22 2,003,449
-----------
15,488,894
-----------
RHODE ISLAND 0.7%
1,500 Rhode Island Port Auth & Econ Dev Corp Arpt Rev
Ser A (FSA Insd)................................. 7.000 07/01/14 1,684,950
-----------
SOUTH CAROLINA 4.8%
9,150 South Carolina St Port Auth Port Rev (AMBAC
Insd)............................................ 6.750 07/01/21 9,509,046
2,545 Spartanburg Cnty, SC Hlth Svcs Dist Inc Hosp Rev
(AMBAC Insd)..................................... 5.300 04/15/25 2,306,457
-----------
11,815,503
-----------
TEXAS 12.6%
5,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX Util
Elec Co Proj A (AMBAC Insd)...................... 6.750 04/01/22 5,257,450
5,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX Util
Elec Co Proj B (FGIC Insd)....................... 6.625 06/01/22 5,205,700
1,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX Util
Elec Co Proj C (FGIC Insd)....................... 6.700 10/01/22 1,047,360
2,500 Conroe, TX Indpt Sch Dist Cap Apprec (Prerefunded
@ 02/01/02) (PSFG Insd).......................... * 02/01/08 1,276,925
3,000 Conroe, TX Indpt Sch Dist Cap Apprec (Prerefunded
@ 02/01/02) (PSFG Insd).......................... * 02/01/09 1,425,600
755 Conroe, TX Indpt Sch Dist Cap Apprec (Prerefunded
@ 02/01/02) (PSFG Insd).......................... * 02/01/11 309,641
1,000 Conroe, TX Indpt Sch Dist Cap Apprec (Prerefunded
@ 02/01/02) (PSFG Insd).......................... * 02/01/12 380,460
4,000 Houston, TX Arpt Sys Rev Sub Lien Ser A (FGIC
Insd)............................................ 6.750 07/01/21 4,178,200
5,250 Tarrant Cnty, TX Hlth Fac Dev Corp Hlth Sys Rev
Harris Methodist Hlth Sys Ser A (AMBAC Insd)..... 5.125 09/01/12 4,857,825
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEXAS (CONTINUED)
$ 4,720 Texas St Veterans Hsg Assistance (MBIA Insd)
(c).............................................. 6.800% 12/01/23 $ 4,891,005
2,000 Tyler, TX Hlth Fac Dev Corp Hosp Rev Mother
Frances Hosp of Tyler (FGIC Insd)................ 6.500 07/01/22 2,078,660
------------
30,908,826
------------
WISCONSIN 2.9%
5,000 Wisconsin St Hlth & Edl Fac Auth Rev Children's
Hosp (Embedded Cap) (FGIC Insd).................. 5.000 08/15/10 4,636,850
1,250 Wisconsin St Hlth & Edl Fac Auth Rev Felician
Hlth Care Ser A Rfdg (AMBAC Insd)................ 7.000 01/01/15 1,332,112
1,000 Wisconsin St Hlth & Edl Fac Auth Rev Saint Lukes
Med Cent Proj (MBIA Insd)........................ 7.100 08/15/19 1,087,740
------------
7,056,702
------------
PUERTO RICO 2.2%
5,000 Puerto Rico Comwlth Hwy & Tran Ser Y (Embedded
Cap) (FSA Insd).................................. 5.730 07/01/21 5,286,300
------------
TOTAL LONG-TERM INVESTMENTS 98.5%
(Cost $232,076,111) (a)...................................................... 241,354,042
SHORT-TERM INVESTMENTS AT AMORTIZED COST 0.3%................................. 750,000
OTHER ASSETS IN EXCESS OF LIABILITIES 1.2%.................................... 2,861,988
------------
NET ASSETS 100%............................................................... $244,966,030
============
</TABLE>
*Zero coupon bond
(a) At April 30, 1996, cost for federal income tax purposes is $232,076,111; the
aggregate gross unrealized appreciation is $10,672,588 and the aggregate
gross unrealized depreciation is $1,394,657, resulting in net unrealized
appreciation of $9,277,931.
(b) Securities purchased on a when issued or delayed delivery basis.
(c) Assets segregated as collateral for when issued or delayed delivery purchase
commitments.
(d) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $232,076,111) (Note 1).............. $241,354,042
Short-Term Investments (Note 1)........................................ 750,000
Cash................................................................... 46,896
Receivables:
Interest............................................................. 4,192,941
Investments Sold..................................................... 125,675
Unamortized Organizational Expenses (Note 1)........................... 5,828
Other.................................................................. 7,018
------------
Total Assets..................................................... 246,482,400
------------
LIABILITIES:
Payables:
Investments Purchased................................................ 1,033,637
Income Distributions -- Common and Preferred Shares.................. 144,352
Investment Advisory Fee (Note 2)..................................... 120,822
Administrative Fee (Note 2).......................................... 40,274
Accrued Expenses....................................................... 138,035
Deferred Compensation and Retirement Plans (Note 2).................... 39,250
------------
Total Liabilities................................................ 1,516,370
------------
NET ASSETS............................................................. $244,966,030
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 1,800
issued with liquidation preference of $50,000 per share) (Note 6).... $ 90,000,000
------------
Common Shares ($.01 par value with an unlimited number of shares
authorized, 9,625,246 shares issued and outstanding) (Note 3)........ 96,252
Paid in Surplus........................................................ 141,762,325
Net Unrealized Appreciation on Investments............................. 9,277,931
Accumulated Net Realized Gain on Investments........................... 1,926,778
Accumulated Undistributed Net Investment Income........................ 1,902,744
------------
Net Assets Applicable to Common Shares........................... 154,966,030
------------
NET ASSETS............................................................. $244,966,030
============
NET ASSET VALUE PER COMMON SHARE ($154,966,030 divided
by 9,625,246 shares outstanding)..................................... $ 16.10
============
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................... $ 7,629,745
------------
EXPENSES:
Investment Advisory Fee (Note 2)....................................... 750,332
Administrative Fee (Note 2)............................................ 250,111
Preferred Share Maintenance (Note 6)................................... 128,583
Trustees Fees and Expenses (Note 2).................................... 11,544
Legal (Note 2)......................................................... 8,190
Amortization of Organizational Expenses (Note 1)....................... 3,988
Other.................................................................. 129,126
------------
Total Expenses..................................................... 1,281,874
------------
NET INVESTMENT INCOME.................................................. $ 6,347,871
============
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Realized Gain/Loss on Investments:
Proceeds from Sales.................................................. $ 52,546,770
Cost of Securities Sold.............................................. (49,898,265)
------------
Net Realized Gain on Investments (Including realized loss on closed
option transactions of $25,255 and realized gain on futures
transactions of $149,039)............................................ 2,648,505
------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period.............................................. 17,319,660
End of the Period.................................................... 9,277,931
------------
Net Unrealized Depreciation on Investments During the Period........... (8,041,729)
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS........................ $ (5,393,224)
============
NET INCREASE IN NET ASSETS FROM OPERATIONS............................. $ 954,647
============
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1996 and
the Year Ended October 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 6,347,871 $ 12,887,953
Net Realized Gain/Loss on Investments................... 2,648,505 (439,041)
Net Unrealized Appreciation/Depreciation on
Investments During the Period......................... (8,041,729) 18,551,787
------------ ------------
Change in Net Assets from Operations.................... 954,647 31,000,699
------------ ------------
Distributions from Net Investment Income:
Common Shares......................................... (5,049,972) (10,100,032)
Preferred Shares...................................... (1,611,608) (3,490,755)
------------ ------------
Total Distributions..................................... (6,661,580) (13,590,787)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (5,706,933) 17,409,912
FROM CAPITAL TRANSACTIONS (NOTE 3):
Value of Common Shares Issued Through Dividend
Reinvestment........................................ 95,966 -0-
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS................... (5,610,967) 17,409,912
NET ASSETS:
Beginning of the Period................................. 250,576,997 233,167,085
------------ ------------
End of the Period (Including undistributed net
investment income of $1,902,744 and $2,216,453,
respectively)......................................... $244,966,030 $250,576,997
============ ============
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 24, 1992
Six Months (Commencement
Ended Year Ended October 31 of Investment
April 30, ------------------------- Operations) to
1996 1995 1994 1993 October 31, 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period (a).... $16.693 $14.883 $18.213 $15.278 $14.737
------- ------- ------- ------- -------
Net Investment Income.......... .661 1.340 1.351 1.365 .924
Net Realized and Unrealized
Gain/Loss on Investments..... (.561) 1.883 (3.150) 2.949 .340
------- ------- ------- ------- -------
Total from Investment
Operations..................... .100 3.223 (1.799) 4.314 1.264
------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............... .525 1.050 1.050 .970 .525
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders..... .168 .363 .301 .293 .198
Distributions from Net Realized
Gain on Investments:
Paid to Common
Shareholders............... -0- -0- .146 .086 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders..... -0- -0- .034 .030 -0-
------- ------- ------- ------- -------
Total Distributions.............. .693 1.413 1.531 1.379 .723
------- ------- ------- ------- -------
Net Asset Value, End of the
Period......................... $16.100 $16.693 $14.883 $18.213 $15.278
======= ======= ======= ======= =======
Market Price Per Share at End of
the Period..................... $16.125 $15.750 $13.500 $17.250 $14.500
Total Investment Return at
Market Price (b)............... 5.73%* 24.96% (15.57%) 26.98% .09%*
Total Return at Net Asset Value
(c)............................ (.48%)* 19.80% (12.20%) 26.75% 5.33%*
Net Assets at End of the Period
(In millions).................. $ 245.0 $ 250.6 $ 233.2 $ 265.2 $ 237.0
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares......................... 1.59% 1.63% 1.57% 1.54% 1.51%
Ratio of Expenses to Average Net
Assets......................... 1.02% 1.03% 1.01% .99% 1.01%
Ratio of Net Investment Income to
Average Net Assets Applicable
to Common Shares (d)........... 5.87% 6.16% 6.33% 6.29% 6.08%
Portfolio Turnover............... 18.02%* 27.82% 26.33% 38.49% 90.15%*
</TABLE>
(a) Net asset value at January 24, 1992, is adjusted for common and preferred
share offering costs of $.263 per common share.
(b) Total investment return at market price reflects the change in market value
of the common shares for the period indicated with reinvestment of dividends
in accordance with the Trust's dividend reinvestment plan.
(c) Total return at net asset value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.
(d) Net investment income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
* Non-Annualized
See Notes to Financial Statements
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Trust for Insured Municipals (the "Trust") is
registered as a diversified closed-end management investment company under the
Investment Company Act of 1940, as amended. The Trust's investment objective is
to provide a high level of current income exempt from federal income tax,
consistent with preservation of capital. In normal market conditions, the Trust
intends to invest substantially all of its assets in municipal securities which
are covered by insurance with respect to the timely payment of principal and
interest. The Trust commenced investment operations on January 24, 1992.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of less than 60 days are valued at
amortized cost.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made.
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
D. ORGANIZATIONAL EXPENSES--The Trust has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
connection with the Trust's organization in the amount of $40,000. These costs
are being amortized on a straight line basis over the 60 month period ending
January 23, 1997. Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") has agreed that in the event any of the initial shares of the Trust
originally purchased by VKAC are redeemed during the amortization period, the
Trust will be reimbursed for any unamortized organizational expenses in the same
proportion as the number of shares redeemed bears to the number of initial
shares held at the time of redemption.
E. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At October 31, 1995, the Trust had an accumulated capital loss
carryforward for tax purposes of $721,727, of which $282,686 and $439,041 will
expire on October 31, 2002 and 2003, respectively.
F. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays dividends from
net investment income to common shareholders monthly. Net realized gains, if
any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains which are included as ordinary income for tax
purposes.
G. INSURANCE EXPENSE--The Trust typically invests in insured bonds. Any
portfolio securities not specifically covered by a primary insurance policy are
insured either through secondary market insurance or portfolio insurance. The
insurance policies guarantee the timely payment of principal and interest on the
securities in the Trust's portfolio.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .60% of the average net assets of the Trust. In addition, the Trust
will pay a monthly administrative fee to VKAC, the Trust's Administrator, at an
annual rate of .20% of the average net assets of the Trust. The administrative
services provided by the Administrator include
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
record keeping and reporting responsibilities with respect to the Trust's
portfolio and preferred shares and providing certain services to shareholders.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Trust, of which a trustee of the Trust is an affiliated person.
For the six months ended April 30, 1996, the Trust recognized expenses of
approximately $10,500 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC.
At April 30, 1996, VKAC owned 6,700 common shares of the Trust.
3. CAPITAL TRANSACTIONS
At April 30, 1996 and October 31, 1995, paid in surplus related to common shares
aggregated $141,762,325 and $141,666,418, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares...................... 9,619,286 9,619,286
Shares Issued Through Dividend
Reinvestment........................ 5,960 -0-
--------- ---------
Ending Shares......................... 9,625,246 9,619,286
========= =========
</TABLE>
4. INVESTMENT TRANSACTIONS
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the six months ended April 30, 1996, were $44,934,523 and
$49,898,265, respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio and to
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
manage the portfolio's effective yield, maturity and duration. All of the
Trust's portfolio holdings, including derivative instruments, are marked to
market each day with the change in value reflected in the unrealized
appreciation/depreciation on investments. Upon disposition, a realized gain or
loss is recognized accordingly.
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. OPTION CONTRACTS--An option contract gives the buyer the right, but not the
obligation to buy (call) or sell (put) an underlying item at a fixed exercise
price during a specified period. These contracts are generally used by the Trust
to manage the portfolio's effective maturity and duration.
Transactions in options for the six months ended April 30, 1996, were as
follows:
<TABLE>
<CAPTION>
CONTRACTS PREMIUM
- ----------------------------------------------------------------------------
<S> <C> <C>
Outstanding at October 31, 1995.................... -0- $ -0-
Options Written and Purchased (Net)................ 500 (225,910)
Options Terminated in Closing Transactions (Net)... (500) 225,910
----- ---------
Outstanding at April 30, 1996...................... -0- $ -0-
===== =========
</TABLE>
B. FUTURES CONTRACTS--A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in futures on U.S. Treasury Bonds and the Municipal Bond
Index and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the portfolio's effective maturity and
duration.
The fluctuation in market value of the contracts is settled daily through a
cash margin account. Realized gains and losses are recognized when the contracts
are closed or expire.
Transactions in futures contracts, each with a par value of $100,000, for
the six months ended April 30, 1996, were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- ---------------------------------------------------------------------
<S> <C>
Outstanding at October 31, 1995........................... -0-
Futures Opened............................................ 350
Futures Closed............................................ (350)
----
Outstanding at April 30, 1996............................. -0-
====
</TABLE>
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
C. INDEXED SECURITIES--These instruments are identified in the portfolio of
investments. The price of these securities may be more volatile than the price
of a comparable fixed rate security.
An Inverse Floating security is one where the coupon is inversely indexed to
a short-term floating interest rate multiplied by a specified factor. As the
floating rate rises, the coupon is reduced. Conversely, as the floating rate
declines, the coupon is increased. These instruments are typically used by the
Trust to enhance the yield of the portfolio.
An Embedded Cap security includes a cap strike level such that the coupon
payment may be supplemented by cap payments if the floating rate index upon
which the cap is based rises above the strike level. The Trust invests in these
instruments as a hedge against a rise in the short-term interest rates which it
pays on its preferred shares.
6. PREFERRED SHARES
The Trust has outstanding 1,800 Auction Preferred Shares ("APS") in two series
of 900 shares each. Dividends are cumulative and the dividend rate is
periodically reset through an auction process. The dividend periods for Series A
and Series B are 28 days. The average rate in effect on April 30, 1996, was
3.63%. During the six months ended April 30, 1996, the rates ranged from 3.280%
to 3.874%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $50,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.
18
<PAGE> 20
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free
Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal
Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
19
<PAGE> 21
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
OFFICERS AND TRUSTEES
DON G. POWELL*
Chairman and Trustee
DENNIS J. MCDONNELL*
President and Trustee
DAVID C. ARCH
Trustee
ROD DAMMEYER
Trustee
HOWARD J KERR
Trustee
THEODORE A. MYERS
Trustee
HUGO F. SONNENSCHEIN
Trustee
WAYNE W. WHALEN*
Trustee
PETER W. HEGEL*
Vice President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Treasurer
SCOTT E. MARTIN*
Assistant Secretary
WESTON B. WETHERELL*
Assistant Secretary
NICHOLAS DALMASO*
Assistant Secretary
JOHN L. SULLIVAN*
Controller
STEVEN M. HILL*
Assistant Treasurer
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in the Investment Company
Act of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1996 All rights reserved.
(SM) denotes a service mark of Van Kampen American Capital Distributors, Inc.
20
